This PILOT should crash

Sunday

Apr 7, 2013 at 6:00 AM

Robert Nemeth

The grumbling among some Worcester city councilors over the purchase of property in the Massachusetts Biomedical Research Park by the UMass Medical School was a classic example of biting the hand that feeds you. Or, to use another metaphor, it was like trying to kill the proverbial goose that lays golden eggs.

When word got out the other day that the medical school, through newly created nonprofit subsidiaries, paid $40.2 million to acquire three buildings at the research park, some councilors were up in arms because the purchase meant the possible loss of tax revenue for the city.

There was talk about demanding a PILOT arrangement (Payments in Lieu of Taxes) and complaints about UMass flexing its muscle.

When City Manager Michael V. O’Brien and Dr. Michael Collins, chancellor of the Medical School, subsequently announced that the school would make nearly $1.6 million in voluntary payments to the city over the next five years, the PILOT crowd claimed victory, even though discussions about how the med school could financially assist the city began well before the three buildings were acquired. The money will go to support additional services at the Worcester Public Library and programs at Worcester Technical High School.

“We believe as a big and important institution in the city that where it’s possible for us to assist the community to advance, we need to take a leadership role,” Dr. Collins explained. The city and the school plan to collaborate in bringing into those buildings commercial entities in the fields of drug and medical device development, biotechnology and life sciences. If the effort is successful, the properties could generate more money in taxes than in the past.

Even though the deal serves the city’s best interest, it is unlikely to silence PILOT advocates who begrudge the endowment and apparent financial stability of local colleges and universities, ignoring the fact that Worcester’s future prosperity is tied to the prosperity of its institutions of higher learning.

The recent uproar echoes earlier clashes. Some councilors, typically those whose performance is marked by grandstanding rather than thoughtful leadership, have made PILOT a permanent issue. In 2002, complaining about earlier acquisitions by the medical school in the biotech park, Philip P. Palmieri intoned: “UMass has almost become a second government. We can’t afford to let our tax base erode with purchases like this.” Demanding PILOT, he declared: “We’re on a mission. We’re not going to give up.”

These people seem to forget they are in no position to demand anything. The colleges are tax exempt for good reason, and have been doing more than their fair share. If there is more to be given, it should come voluntarily, not through coercion. Over the years, City Manager Michael V. O’Brien has been talking individually with academic leaders about the possibility of arrangements allowing the institutions to sponsor public services currently sustained through tax dollars.

“A PILOT program would bring in about $750,000 a year at best,” the city manager told me a couple of years ago. “We are getting that much in contribution from John O’Brien alone.” Mr. O’Brien, former president and CEO of UMass Memorial Health Care, has supported many community-building initiatives, from a $1 million affordable housing project for employees to a massive summer job program for city youth. The medical school has been fostering biotech and medical research and supporting science education throughout the public school system. Together health care, biotech and health education account for more than 38 percent of jobs in the city.

More to the point, elected officials should ask themselves the question: Where would Worcester be without the medical school and its clinical affiliate UMass Memorial Health Care, the city’s largest employers? It would be a fading blue-collar town, struggling with unemployment and searching for an identity.

It’s worth remembering that in the 1960s, Worcester made a Sisyphean effort to have the medical school located in the city. It was a long and bitter battle that Worcester won mostly because of a unique and relentless community effort. The state’s political and medical establishments favored Boston, Amherst or Springfield as the site. Even after UMass trustees selected Worcester by a vote of 12 to 11, there were countless attempts to change the vote. Opponents sought a restraining order from the state Supreme Judicial Court, arguing that the Legislature rather than the trustees should pick the site.

Efforts to win $24 million in federal funds for a teaching hospital were blocked because of renewed criticism on Beacon Hill. The U.S. surgeon general said federal consultants could find no evidence of support for the medical school from hospitals in the Worcester area. When the first class of 16 students was admitted in September 1970, it was still uncertain whether the facility would become a full-fledged medical center. The class of 100 students originally scheduled for 1972 did not materialize until three years later.

The late Forrest Seymour, editor of the Telegram & Gazette during Worcester’s battle for the medical school, summed up why the city had won: “The whole performance during these years by Worcester’s leadership in professional, business, political and other fields was a magnificent illustration of a city with confidence in its future and citizens willing to put their names and reputations on the line for it.”